DECISION GRANTED AN EXEMPTION FOR NORFOLK SOUTHERN RAILWAY COMPANY TO DISCONTINUE SERVICE OVER AN APPROXIMATELY 53.2-MILE STUB-ENDED RAIL LINE IN ISLE OF WIGHT, SOUTHAMPTON, GREENSVILLE, AND BRUNSWICK COUNTIES, VA., SUBJECT TO STANDARD EMPLOYEE PROTECTIVE CONDITIONS.

Digest:[1]
This decision allows Norfolk Southern Railway Company to discontinue its
freight rail service over approximately 53.2 miles of rail line in Isle of
Wight, Southampton, Greensville, and Brunswick Counties, Va., subject to
standard employee protective conditions.

Decided: March 12,
2014

By
petition filed on November 26, 2013, Norfolk Southern Railway Company (NSR)
seeks an exemption under 49 U.S.C. § 10502 from the
provisions of 49 U.S.C. § 10903 to
discontinue service over an approximately 53.2-mile stub-ended rail line,
extending from milepost FD 37.0 near Franklin to the end of the line at
milepost FD 90.2 at Edgerton, in Isle of Wight, Southampton (including the
independent City of Franklin), Greensville (including the
independent City of Emporia), and Brunswick Counties, Va. (the Line). Notice
of the exemption was served and published in the Federal Register on December 16,
2013 (78 Fed. Reg. 76,192).

No
comments in opposition to the proposed discontinuance were filed. We are
granting the exemption from 49 U.S.C. § 10903, subject
to standard employee protective conditions.

BACKGROUND

According
to NSR, the Line was built by the Atlantic & Danville Railway in the 1800s
as a through route from the Virginia Tidewater area to Danville, Va. It was
leased by the Southern Railway Company, a NSR predecessor, from 1899 to 1949,
at which time it returned to independent operation. The Norfolk & Western
Railway Company, another NSR predecessor, acquired the Line in the 1960s and
formed the Norfolk, Franklin & Danville Railway Company (NFDR) to operate
it. Before being absorbed into NSR in 1983, NFDR had gradually abandoned the
portion of the Line west of Edgerton, which had become the westernmost
extension of NSR’s Franklin
District and had devolved from a secondary trunk line to a branch line relying
on local traffic.

NSR
argues that the Line is a burden on it and interstate commerce, asserting that
the potential annual revenue that the Line’s four remaining
shippers could generate would be heavily outweighed by the costs of maintaining
and operating it. Further, NSR contends that the substantial loss it would
incur from continuing to operate the Line would be exacerbated by the fact that
the Line is no longer operable, having been embargoed on October 1, 2013, as a
result of deteriorating track and bridge conditions, and is in need of
substantial rehabilitation. NSR further stated that such rehabilitation costs
cannot be recouped because the Line cannot be operated profitably.

Because
of a curtailment of rail shipments from a stone quarry at the end of the Line
near Edgerton, NSR states that rail traffic declined by 89%, from 3,730
carloads in 2010 to 414 carloads in the 12 month base year (July 2012-June
2013). Moreover, NSR claims that the Line’s remaining
traffic is disadvantaged by significant circuity, subjecting NSR and its
customers to additional transportation and equipment costs, because the Line’s traffic must move eastward to the Tidewater area
and then westward on a roughly parallel east-west route to the north before it
can connect with the remainder of NSR’s system. NSR
adds that there is no overhead traffic because the Line is stub-ended.

NSR
argues that, to end the embargo and resume operations at Federal Railroad Administration
(FRA) Class I track safety standards, it would have to spend $5,894,900 to
timber and surface 32.2 miles of track and to replace two of the Line’s 14 timber trestles. Moreover, to maintain the
Line at FRA Class I standards, NSR claims a base year normalized maintenance
cost of $755,257 ($14,197 per track mile) and projects a forecast year
normalized maintenance cost of $766,929 ($14,416 per track mile). NSR contends
that the Line experienced a base year avoidable loss from rail operations of
$921,596, and it projects a forecast year avoidable loss from rail operations
of $935,839.[2]

NSR
states that the Line is structurally limited to freight cars with a gross
maximum weight of 263,000 pounds, and that low on-Line traffic levels make it
unattractive to potential short line operators. According to NSR, even a
scaled down switching operation at Emporia, which would account for 375 of the
Line’s 414 base year/forecast year shipments,
was found to be economically impracticable, based on the low volume of traffic
and the cost of installing connecting track from the Line to a nearby
north-south line of CSX Transportation, Inc. Moreover, NSR contends that 392
of the 414 base year/forecast year shipments consisted of exempt commodities
already subject to effective intermodal competition, and that the small volumes
of non-exempt agricultural commodities that moved over the Line during this
time make them suitable for highway transportation. Further, NSR contends that
each of the Line’s four remaining
shippers that received service prior to the embargo—Lawrenceville Brick, Inc., Georgia Pacific, LLC,
Carolina Eastern Company, and Toll Integrated Systems—would have extensive truck service options via the
existing highway system, and it believes that most, if not all of them, already
make use of trucks regularly.[3]

DISCUSSION AND CONCLUSIONS

Under
49 U.S.C. § 10903, a rail
carrier may not discontinue operations without the prior approval of the
Board. Under 49 U.S.C. § 10502, however,
we must exempt a transaction or service from regulation when we find that: (1)
continued regulation is not necessary to carry out the rail transportation
policy of 49 U.S.C. § 10101; and (2)
either (a) the transaction or service is of limited scope, or (b) regulation is
not necessary to protect shippers from the abuse of market power.

Detailed
scrutiny under 49 U.S.C. §10903 isnot
necessary to carry out the rail
transportation policy (RTP) in
this case. The Line’s shippers have
neither opposed the proposed discontinuance nor indicated that they would be
adversely affectedby it. By minimizing
the administrative expense ofthe application
process, an exemptionwould
expediteregulatorydecisionsandreduceregulatorybarrierstoexit.49U.S.C.
§§10101(2) and (7). An exemption would alsofostersoundeconomicconditionsandencourage efficient management
by more quickly permitting NSRtodiscontinueoperations on a line that
has been embargoed and can only be operated at a substantial loss. 49U.S.C.§§10101(5)and(9).
OtheraspectsoftheRTPwouldnotbeadverselyaffectedbythe use ofthe exemption process.

We
also find that regulation under 49U.S.C.§ 10903 is not necessary to protect
shippers from the abuse of market power.[4] As noted, no
shippers have opposed the proposed discontinuance, and the record indicates
that viable transportation alternatives are readily available. Nevertheless,
to ensure that the four remaining shippers are informed of this proceeding and
of our action here, we will direct NSR to serve a copy of this decision on
Lawrenceville Brick, Inc., Georgia Pacific, LLC, Carolina Eastern Company, and
Toll Integrated Systems so that they receive it within five days of the service
date of this decision, and to certify to the Board contemporaneously that it
has done so.

Under
49 U.S.C. § 10502(g), the
Board may not use its exemption authority to relieve a carrier of its statutory
obligation to protect the interests of its employees. Accordingly, as a
condition to granting this exemption, we will impose upon NSR the employee
protective conditions set forth in Oregon Short Line Railroad—Abandonment Portion Goshen Branch
Between Firth & Ammon, in Bingham & Bonneville Counties, Idaho, 360
I.C.C. 91 (1979).

Because
this is a discontinuance of service and not an abandonment, the Board need not
consider offers of financial assistance (OFAs) under 49 U.S.C. § 10904 to acquire the Line for continued
rail service, trail use requests under 16 U.S.C. § 1247(d),
or requests to negotiate for public use of the Line under 49 U.S.C. § 10905. However, the OFA provisions under 49 U.S.C. § 10904 for a subsidy to provide continued rail
service do apply to discontinuances. Furthermore, environmental reporting
requirements under 49 C.F.R. § 1105.7 and
historic reporting requirements under 49 C.F.R. § 1105.8
do not apply. See 49 C.F.R. §§ 1105.6(c) and 1105.8(b).

This
decision will not significantly affect either the quality of the human
environment or

the conservation
of energy resources.

It
is ordered:

1.
Under 49 U.S.C. § 10502, we exempt
from the prior approval requirements of

49 U.S.C. § 10903 the discontinuance of service by NSR of its
operations over the above described line, subject to the employee protective
conditions set forth in Oregon Short Line Railroad–Abandonment Portion Goshen Branch
Between Firth & Ammon, in Bingham &

Bonneville
Counties,
Idaho, 360 I.C.C. 91 (1979).

2.
NSR is directed to serve a copy of this decision on the Line’s existing shippers so that they receive it within
five days after the service date of this decision and to certify
contemporaneously to the Board that it has done so.

3.
An OFA under 49 C.F.R. § 1152.27(b)(2) to
subsidize continued rail service must be received by NSR and the Board by March
24, 2014, subject to time extensions authorized under 49 C.F.R. § 1152.27(c)(1)(i)(C). The offeror must comply with
49 U.S.C. § 10904 and 49
C.F.R. § 1152.27(c)(1). Each OFA must be
accompanied by the filing fee, which currently is set at $1,600. See 49
C.F.R. § 1002.2(f)(25).

4.
OFAs and related correspondence to the Board must refer to this proceeding. The
following notation must be typed in bold face on the lower left-hand corner of
the envelope: “Office of
Proceedings, AB-OFA.”

5.
Petitions to stay must be filed by March 28, 2014. Petitions to reopen must be
filed by April 7, 2014.

6.
Provided no OFA to subsidize continued rail service has been received, this
exemption will be effective on April 12, 2014.

By
the Board, Chairman Elliott and Vice Chairman Begeman.

[1] The digest constitutes no part of the
decision of the Board but has been prepared for the convenience of the reader.
It may not be cited to or relied upon as precedent. SeePolicy
Statement on Plain Language Digests in Decisions, EP 696 (STB served Sept.
2, 2010).

[2] NSR’s base year and forecast year avoidable
losses from rail operations include the costs of normalized maintenance and the
other on-branch and off-branch costs claimed by NSR. Even disallowing the high
normalized maintenance costs claimed here, NSR still would incur a substantial
avoidable loss from rail operations.

[3]NSR certifies that it has served a copy
of its discontinuance petition for exemption on these four shippers.

[4] Given our market power finding, we
need not determine whether the proposed discontinuance is limited in scope.